Ministry proposes raising monthly family deduction for personal income taxpayers

As part of a draft resolution prepared for the National Assembly (NA) Standing Committee, the proposal is now open for public consultation.

The initiative follows an approximately-21.24-percent rise in Vietnam’s consumer price index (CPI) between 2020 and 2025, surpassing the 20-percent threshold that triggers a mandatory review under the current Law on Personal Income Tax.

Currently, taxpayers are entitled to a deduction of VND11 million (US$421.6) per month for themselves and VND4.4 million ($168.6) for each dependent.

These levels have been in effect since July 1, 2020.

The ministry now outlines two options for raising these deduction levels to better align with actual socio-economic conditions, thereby supporting people’s livelihoods, stimulating consumer spending, and promoting national economic growth.

Option 1 would increase deductions for taxpayers to VND13.3 million ($508.8) and for dependents to VND5.3 million ($202.7) per month.

Option 2, the ministry's preferred choice, would elevate the deduction to VND15.5 million ($593) for individuals and VND6.2 million ($237.2) for dependents.

Should option 1 be adopted, state budget revenue is projected to fall by approximately VND12 trillion ($459 million), while option 2 could reduce the revenue by as much as VND21 trillion ($803.2 million).

However, the ministry anticipates that this revenue loss may be partially offset by increased revenue from other consumption taxes arising from higher disposable income among taxpayers who benefit from the raised family deductions.

If endorsed by the NA, the changes would take effect from January 1, 2026.

The ministry invites agencies to submit feedback on the draft resolution by August 1, so that it can be finalized and submitted to the government for forwarding to the NA Standing Committee for approval.